This is probably the most cliche statement that people will mention about starting a business, “Create a Business Plan”. I agree that it is, but whenever I am asked, “how do I start a business?” This is always one of the top 5 things I mention. In my short 17 years of being an entrepreneur I have written around 10 business plans and I always end up saving them and putting them in a box that sits in my office closest to be looked on occasion when I reminisce about the past. Out of the 10 only 3 have been implemented into reality and the others were ideas that, well didn’t come to fruition for one reason or another, and maybe a pipe dream never to come into reality. Why then would I create a business plan when only 30% of the ideas come to reality which out of the three…1 didn’t work out and closed down, 1 was mediocre but I was able to sell the business (mentioned in my last blog), and 1 was what I would deem as a “success”. So 30% of the ideas became reality and out of that only 33% actually worked out to a place of satisfaction (honestly, I don’t think any business owner is satisfied but always hard to make things better. Much like an artist, it’s never perfect and tweaking never ends). The reason why I create business plans are for these reasons:
1. If I’m not willing to create a plan for a business, I shouldn’t be thinking about opening a business – I’ve learned the hard way that business is tough and will eat anyone alive. The market is unbiased and has no emotion to see millions of businesses especially small businesses open and close. The success rate of small business is slim and even those who make it, the chances of making it 10 years is even slimmer. Owning a business will drop you to your knees in tears, cause you to have multiple sleepless nights, test your heart, challenge your courage, and test your persistence. You put everything on the line to create a dream but that dream cannot stay in your head as a fantasy, it MUST be put down somewhere visual to look at and evaluate much like a GPS showing us the route from point A to B and if that route is congested it gives us other routes that might take a little longer but has less hurdles. The business plan can take a little time, even weeks to create but those dedicated weeks in creating a plan will show you if the path is worth taking or putting in a box in your closet to occasionally look at reminiscing about the past.
2. It forces you to think about the obvious in detail – some of the most obvious things in business get overlooked. For example, location. Most of us in our minds who want to open a business already have a location in mind stubbornly never budging because in our “minds” it’s the best location. However, how much actual research was done on that location? Does it really cater to your demographic and who then is my demographic? Does the demographic have the discretionary income to purchase my goods and what are my price points? Do my price points allow me to pay rent, employees, insurance? How much do I pay my employees? How much will my rent be? How much will my insurance cost? Who’s my competition in the area? Oh, what about the website? What about social media? What about getting my telephone number? What about signage? What about….what about….what about….and the list goes on. I wish business in the beginning was an easy mathematical equation, but the truth is that it takes time to get to that place. You won’t know how much income will come in every month, you won’t know what will break and needs fixing, you won’t know what natural disasters will strike causing you to close down for days at a time, etc. The point being, the business plan gives us an extra level of detail that most don’t ever take and whatever advantage we can have over the competition we need it.